It's no secret that commercial real estate in San Francisco, like the rest of the country, is struggling.Since the pandemic, vacancy rates have increased as businesses have evacuated the Bay Area and are less likely to lose workers than other cities. to go back to the office.
But one subsector of the tech industry is changing. Terrain: AI.
San Francisco is experiencing an explosion of generative AI startups, with the volume of office space leased by AI companies expected to increase by 46% to 3.6 million square feet in 2023, according to global real estate firm Jones Lang LaSalle (JLL). It became. Alexander Quinn, senior director of research, predicts that number will rise to 12.5 million by 2030.
“This is a reversal for a lot of established technology companies that have been shrinking over the last three years,” Quinn said of expanding their AI footprint. AI companies accounted for nearly a third of his total leasing activity in 2023. This is mainly due to large real estate transactions from the US. OpenAI and humanhas significantly expanded its footprint in the city.
JLL expects AI companies' share of new leases to decline slightly in 2024, but remain much larger than pre-pandemic levels (about 3-4 times).
Why is AI coming to San Francisco?
It's easy. That's where the talent lies. Quinn said about 20% of his AI talent in the country is based in the Bay Area. It's home to universities that have produced AI leaders like Sam Altman (like Stanford University and the University of California, Berkeley).
AI chatbot startups in 2023 alone and me I moved from Miami to downtown San Francisco.Toronto-based AI platform close contact We have opened a second headquarters in the city. AI software provider Netradyne There, they expanded their presence.
“The Bay Area continues to attract a significant portion of the nation's venture capital funding, solidifying its position as a pivotal location,” Tom Schmidt, Nettradyne's chief financial officer, said last fall.
What it means for San Francisco's economy
Economic activity in downtown San Francisco is It accounts for about 75% of the city's GDP, according to city data cited by Quinn. “The more we see a resurgence of the downtown commercial office market, the broader the impact it will have on the overall Bay Area economy,” he said.
As AI companies lease more space, they will also attract other businesses to the area.Startup accelerators such as Y Combinator We recently moved our headquarters to the area This is to take advantage of the growing AI industry.
